HFI Research note on tightness of U.S. NGas market

[dan_s]

HFI comments this morning:

Natural gas market balances are tight. How tight? The implied balance for the week ending 9/6 suggested an injection close to +71 Bcf. EIA reported +40 Bcf.

Once again, we think the culprit is on the demand side.

If you look at total gas demand, we are currently trending lower y-o-y. And most of that is thanks to "weak" power burn demand.

But if that was really the case, then injections should have been materially higher than what's reported. We know based on the way the figures are tracked, it can't be on the supply side.

Lower 48 production has already been revised higher thanks to the EIA 914 reports.

So if we step back and look at natural gas fundamentals, other than bloated storage, which is slowly getting depleted away, the demand side is being understated, while supplies remain constrained (thanks to low prices).

If the market can just hold out a bit longer, the natural gas bulls might finally get what they want.
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Bottomline: As I have posted here many times, Market Forces will always balance the U.S. natural gas market. When the gas market is over-supplied (due to two mild winters in a row) the gas price goes down and upstream companies cut back on new well completions. When I worked at Hess (1983 to 2002) we choked back gas wells if the gas price got too low in the summer. 3.3 Bcf per day of additional LNG export capacity will soon be on line. That alone will send ngas storage levels below the 5-year average in Q1 2025.